Chapter 9: Enabling transmission and other infrastructure
Approximately 14 submitters commented on the issues relating to development of transmission and port infrastructure. The most substantive feedback to this chapter generally came from the energy industry, port owners and Transpower, the state-owned enterprise responsible for the national grid and operating the transmission system.
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Connection infrastructure
The discussion document outlined international and domestic approaches to enabling transmission for renewable energy infrastructure. It sought feedback on whether developers would be best placed to build offshore connection infrastructure in New Zealand and the potential benefits of connection infrastructure being shared between multiple parties. The discussion document also invited submitters to comment on any potential barriers in the current regulatory system and how these might need to be addressed.
Most submitters, including Transpower and offshore renewable energy developers, supported developers being responsible for the funding and building of offshore transmission infrastructure. This was mostly because developers have the relevant experience and are therefore expected to be able to deliver infrastructure at a lower cost and/or faster pace. Some submitters also highlighted that the ability for a developer to manage its own delivery risk for such a material part of the overall project would be better for investment confidence.
Most submitters suggested that Transpower should then own and operate the offshore transmission, emphasising that a single, consistent asset owner is important. Offshore renewable energy developers said role sharing would provide developers with greater control over the quality, functionality, durability, and timely delivery of the assets. Transpower was supportive of the hybrid approach, provided it is involved in the design and planning of the offshore grid to ensure assets are built to the appropriate standard and the configuration of the offshore assets is efficient. Transpower noted that this approach has led to more efficient outcomes for electricity systems internationally.
The approach above would require a transfer of assets. Submitters were divided on how this transfer should best be managed. Some submitters, particularly offshore renewable energy developers, suggested a clear transfer process would provide greater certainty and transparency and help deliver fair outcomes for both sides. Some of these submitters suggested the regime should set out a transfer process, including factors such as performance requirements, asset valuation methodologies and cooling-off periods. In contrast, some submitters suggested that commercial negotiations between Transpower and developers could be sufficient and would enable flexibility to maintaining best practice with processes for transmission asset transfers used onshore. However, other submitters noted that the asset transfer requirements and obligations for offshore wind will likely be different to those for onshore assets.
Most of those that suggested a transfer model emphasised the importance of coordination and cooperation between the developer and the transmission system operator (Transpower). This was a common theme across responses, with many of submitters in favour of an alternative approach advocating for coordination. More specifically, some submitters suggested a role for Transpower in the design of the asset (even when being led by a developer).
Most submitters agreed that there could be benefits of joint connection infrastructure, particularly onshore. Several submitters, including Taranaki iwi and energy industry participants, noted that progressing on similar timelines in areas of high interest could result in fewer cables thereby reducing environmental impacts and costs. Several offshore renewable energy developers noted that commercial sensitivities and timing issues could be mitigated by Transpower playing a coordinating role. Transpower also supported facilitating joint connection and noted that a joint regional connection study, covering planning of onshore transmission connection design, was underway.
However, most submitters agreed that commercial realities, combined with the requirements of the Commerce Act, means that joint connection is currently unlikely to occur in practice.
Interconnection infrastructure
The discussion document acknowledged the interdependency between interconnection infrastructure development and final investment decisions for offshore renewable energy developments. Specifically, it outlined that under the current system interconnection upgrades cannot progress until final investment decisions or regulatory approvals for developing generation assets are obtained, and final investment decisions cannot be secured until developers have certainty of a grid capacity. The discussion document sought feedback on the importance of these interdependencies given the long timeframes for interconnection upgrades. It also sought feedback on potential opportunities to front-load any planning work to support final investment decisions without exposing electricity consumers to risk.
Submitters almost unanimously agreed with the timeline challenge for onshore interconnection assets described in the discussion document. However, submitters were divided on whether this is an issue specific to offshore renewable energy or whether it is a sector-wide issue. Most noted that this is a sector-wide issue and therefore should not be dealt with in the offshore regime. Transpower echoed this view and noted that, in a competitive open-access regime, front loading any planning would not necessarily provide offshore wind developers a guarantee on capacity to market. Submitters suggested a range of routes to alleviate the issue, including:
- changes to transmission regulatory regimes to better facilitate investment ahead of need;
- Government being more involved in strategic planning, e.g., by setting clear, location-based targets; and
- a Renewable Energy Zone structure to help with coordination, faster investment and streamline processes for environmental consents.
As mentioned in the discussion document, these sector-wide points are being considered as part of the separate discussion document on Measures for Transition to an Expanded and Highly Renewable Electricity System and associated work programme. Many of our submitters also responded to that consultation. Nevertheless, some submitters commented on potential specific offshore solutions – with some suggesting that it could be reasonable and efficient to get offshore wind developers to fund early investigations to ease timeline challenges. However, others were strongly opposed to this approach, highlighting that it would be inconsistent with other technologies and may not work given it is not possible to reserve capacity in the New Zealand electricity system.
Port infrastructure
The discussion document acknowledged port infrastructure would need to be upgraded to support offshore renewable energy developments. It sought feedback on the nature of upgrades that might be needed, the role port owners and operators might play and any regulatory changes that might be needed to deliver these upgrades.
Almost all the submitters that commented on port infrastructure agreed that development of ports would be critical to delivery of offshore renewable energy projects. Some submitters emphasised the potential for wider benefits of port upgrades beyond offshore wind, for example helping to support a future hydrogen sector and/or oil and gas decommissioning. However, submitters were divided on the role of government in developing this infrastructure. Views ranged from no involvement, to coordination, to government directly funding upgrades.